The rise of the Iceland Pirate Party was a bit exaggerated. Instead of challenging for the top spot at about 20%, they came in third with 14.5%. The Independence Party, part of the current right-of-center coalition, got 29%, while the Panama Papers-damaged PM's Progressive Party was trimmed down to 11.5%.
There isn't a clear working coalition as of yet. The left has 27, the right has 29 and a new center-right Regeneration party has 7 seats. Regeneration seems to hold the balance of power; they split off from the IP over joining the EU, for the IP is opposed and Regeneration is for joining.
Whether that EU split is enough to get them to join a center-left coalition remains to be seen, but it does appear that the Pirates might well be kept away from the helm; the Left-Greens had a bigger vote share than the Pirates, although they both got 10 seats, so the Lefties would be the default choice to draw a PM from, assuming Regeneration goes left rather than right.