Learn Icelandic: Við erum í bíóinu með þeim. - We are in the cinema with them.

This is the main focus of your current lesson! The preposition með means "together with" here. When used for accompaniment, it forces the following word into the dative case. Þeim is the dative form for all three plural "they" pronouns (þeir, þær, and þau).

Why is the word for cinema bíóinu instead of just bíó?

Two things are happening here. First, we are talking about a specific cinema, so we attach the definite article to the end to mean "the cinema". Second, the preposition í requires the dative case when it indicates a static location (being "in" a place). For the neuter noun bíó, the dative definite form is bíóinu.

Both í and með are followed by the dative case in this sentence. Do they always trigger the dative?

Not always, but they do in this context! Prepositions in Icelandic can trigger different cases depending on their exact meaning. Í takes the dative when describing a fixed location, and með takes the dative when talking about being in someone's company. If their meanings change, they might take the accusative case instead.

What is the dictionary form of the verb erum?

The dictionary form is að vera (to be). Við erum is the conjugated form meaning "we are." It is a very common irregular verb, so this is a great building block to memorize for talking about yourself and others.