Outerwall Inc.'s Redbox kiosk reported another decline in movie rentals last quarter, but it was offset by growth in its Coinstar and electronics recycling kiosks.

Shares of Outerwall, down 42% over the past year, rose 8.5% to $43.50 after hours as the company's total first-quarter revenue topped analyst estimates.

Redbox rentals fell to about 137.7 million from 173 million. The general decline in physical rentals has hurt Redbox results in recent quarters. Additionally, a December 2014 price increase that helped revenue and margins at first has been blamed for reducing demand.

Outerwall also owns the Coinstar coin-counting business and ecoATM, which provides kiosks for the sale of used phones, MP3 players and tablets.

In February, activist investment firm Engaged Capital LLC disclosed a stake in Outerwall and urged the company to cease virtually all investment and share repurchases, pay annual dividends of $125 million, and begin a sale process.

In March, Outerwall said it would explore "strategic and financial alternatives." Earlier this month, Outerwall said it reached a "cooperation agreement" with Engaged that includes board representation.

Outerwall said Thursday, "During the quarter, we continued to reduce expenses, create efficiencies and optimize our kiosk networks to improve profitability."

For the quarter March 31, Outerwall earned $38.5 million, or $2.29 a share, compared with $35.6 million, or $1.87 a share, a year earlier. An $11.8 million decrease in net interest expense, partly because of a gain on early debt extinguishment, helped results in the quarter.

Outerwall's total revenue fell to $536 million from $608.3 million but still beat the average analyst estimate of $508 million.

Revenue at the Redbox segment fell to $421.5 million from $519.5 million. Coinstar revenue rose 4.4% to $72.4 million, while revenue at the ecoATM segment more than doubled to $42.1 million.

For 2016, Outerwall expects core earnings from continuing operations of $5.35 to $6.55 a share. Analysts, on average, were expecting earnings of $5.28 a share.

Write to Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

April 28, 2016 18:15 ET (22:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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